Letting to self-employed foreign contractors

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    Letting to self-employed foreign contractors

    Hi,

    I have the possibility of letting my two bedroomed flat to two Republic of Ireland lads who are on a three month contract with a main contractor building a power station locally.
    They say that they know they have at least a 3 month contract with the possibility of a further 6 months or even a year. The current going rate is £100 per person per week to include all utility bills ( not telepnone!). The flat is advertised as £425 for a 6 month AST to LHA or private applicants.
    I was reluctant at first but with the prospect of not having the flat rented until the next year when the market picks up it does seem to be a temporary solution.
    My agent will do all the necessary credit checks but as they are only here for possibly 3 months they could stay on for the remainder of the 6 month term without paying any rent or do a bunk back to ireland leaving without paying any rent at all for the 3 months they are working.

    As they are self employed, I understand from the courts that you can't get an attachment of earnings and tracing them may be a problem.

    What precautions other than credit checks, possible guarantor, agency/employer references and protected deposit should I be looking at?

    #2
    Originally posted by merlin34 View Post
    My agent will do all the necessary credit checks but as they are only here for possibly 3 months they could stay on for the remainder of the 6 month term without paying any rent or do a bunk back to ireland leaving without paying any rent at all for the 3 months they are working.
    There is no minimum term for an AST. However, you cannot obtain a possession order, via s.21 procedure, sooner than six months after the tenancy commences.

    A guarantor based in England/Wales would probably be your best bet, to protect against unpaid rent, but bear in mind that there is a European Small Claims Court. Get evidence of their Ireland address (and perhaps address of next-of-kin, too), passport details, etc.

    If they're on a 3 month contract, and the contract isn't then renewed, in all likelihood the tenant will want to go back to Ireland.

    Comment


      #3
      Originally posted by westminster View Post
      There is no minimum term for an AST. However, you cannot obtain a possession order, via s.21 procedure, sooner than six months after the tenancy commences.
      NB: that's true for T's first six-month let. It does not apply to any subsequent replacement tenancy.
      JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
      1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
      2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
      3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
      4. *- Contact info: click on my name (blue-highlight link).

      Comment


        #4
        Thanks for info.
        Passport and UK based guarantor are a good idea. I was thinking about providing a 3 month let but was aware of not being able to gain re-possession before 6 months have lapsed.

        After 6 months I was going to let on a periodic basis.

        I was unaware of the european small claims court though that is useful to know but hopefully won't come to that.

        As you say though if their contract finishes they will probably go back to Ireland, but given Ireland's current economic state being only marginally worse than ours, that might not be viable.

        Thanks

        Comment


          #5
          Originally posted by merlin34 View Post
          I was thinking about providing a 3 month let but was aware of not being able to gain re-possession before 6 months have lapsed.

          After 6 months I was going to let on a periodic basis.
          I think you are better off with a 3 month fixed term. That way, you could potentially have a possession order granted, ready to enforce at the end of 6 months. Whereas with a 6 month fixed term, you can't apply via s.21 till after the fixed term has expired so it'd take a lot longer.

          (Obviously, if there were two months' rent owing and unpaid, you could serve a s.8 and get a possession order even within the fixed term).

          Also, if the tenants do want to leave after 3 months, and they've signed a 6 month contract, you'd have to end the contract with a Deed of Surrender - no big deal, but if, say, the T just disappeared, you could be stuck having to formally regain possession via the courts, just in case T came back. Whereas if the term is 3 months, and T left at the end of the term, the tenancy would simply end.

          Comment


            #6
            merlin34: if the flat was ever your previous only/main residence, consider letting on an SAT preceded by a ground 1 Notice.
            JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
            1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
            2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
            3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
            4. *- Contact info: click on my name (blue-highlight link).

            Comment


              #7
              Originally posted by jeffrey View Post
              merlin34: if the flat was ever your previous only/main residence, consider letting on an SAT preceded by a ground 1 Notice.
              Make sure you serve Ground 2 with Ground 1 if it's mortgaged.
              The advice I give should not be construed as a definitive answer, and is without prejudice or liability. You are advised to consult a specialist solicitor or other person of equal legal standing.

              Comment


                #8
                Originally posted by jeffrey View Post
                merlin34: if the flat was ever your previous only/main residence, consider letting on an SAT preceded by a ground 1 Notice.
                Originally posted by Paul_f View Post
                Make sure you serve Ground 2 with Ground 1 if it's mortgaged.
                The flat is on a BTL mortgage but I did live in it for a while when it was empty. The mortgage company have only known it as a rental property.

                Can you explain how the SAT and ground 1 & 2 Notices work in this scenario?

                Many thanks

                Comment


                  #9
                  A. An SAT Agreement is not very different from its AST equivalent.
                  B. However, it must omit anything about s.21 and must comply with Schedule 2A to the 1988 Act.
                  C. L must serve the Notice (g1, g2, or both) on T before the SAT is executed or its term begins.
                  D. This procedure corresponds with the old s.20 Notice procedure applicable to an AST granted on 15 Jan. 1989 or any date up to/inc. 27 Feb 1997.
                  JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                  1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                  2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                  3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                  4. *- Contact info: click on my name (blue-highlight link).

                  Comment


                    #10
                    Originally posted by jeffrey View Post
                    A. An SAT Agreement is not very different from its AST equivalent.
                    B. However, it must omit anything about s.21 and must comply with Schedule 2A to the 1988 Act.
                    C. L must serve the Notice (g1, g2, or both) on T before the SAT is executed or its term begins.
                    D. This procedure corresponds with the old s.20 Notice procedure applicable to an AST granted on 15 Jan. 1989 or any date up to/inc. 27 Feb 1997.
                    Wouldn't this carry a large risk in terms of removing the right to repossess via s.21? I mean, if the LL made an error in the notices served prior, then he'd have no fallback on s.21.

                    Comment


                      #11
                      True- but:
                      a. g1/g2 do give Court jurisdiction (discretionary) even if no valid Notice had been served; and
                      b. L who makes an error in s.21 Notices (AST) would have no fallback either.
                      JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                      1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                      2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                      3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                      4. *- Contact info: click on my name (blue-highlight link).

                      Comment

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